Government Plans to Unveil New City Construction Plans Earlier

The government announced that the prices of 526 drugs that are subject to Health Insurance will fall as of April 1 and the call rates from fixed phones to mobile phones will be dropped in the first half of this year. The government is also planning to unveil the construction plans of 2 –3 new satellite cities in the Metropolitan area to stabilize the real estate market.

Vice Finance-Economy Minister Kim Gwang-lim chaired a meeting of vice ministers at Bank Center, Myeong-dong today to seek ways of curbing inflation and decided possible measures. 11 vice ministers attended the meeting. The government has been making an all-out effort to curb inflation because it has had concerns about inflation as consumer prices in February rose by 3.9% compared to the same period last year.

The government said that inflation would continue to March due to oil prices hike in the domestic market, rent hike in the Spring moving season, rising prices of agricultural products, mounting educational costs, and bus and subway fare rise.

Accordingly, the government will prepare counter measures by ministry and drop prices of 526 drugs that are subject to Health Insurance by average 2.7 % as of April 1.

To curb the inflation in the real estate market followed by re-construction approvals on Seoul apartments, the government will unveil construction plans of 2-3 satellite cities in the Metropolitan area that will absorb housing demands. The government will also provide reserved vegetables including cabbages, radishes and onions whose prices are on the rise and encourage greenhouses to produce vegetables as early as next month.

If the war on Iraq is prolonged and the global oil prices soar, the government will take step-by-step emergency measures including imposition of oil import fees, decline of tariffs, enforcement of price ceiling system and decrease of national taxes. The Korean Development Institute will edge up 3.3 % of consumer price prospect that it projected at the end of last year due to the inflation factors including increases in international oil prices and foreign exchange rates.

Kwang-Hyun Kim kkh@donga.com